Prices have been under pressure recently, trading in a tight range and slightly lower due to limited trading volume and liquidity.
However, as analysts at Citi Research noted in a note dated Monday, this weakness in uranium prices is expected to ease as demand for nuclear power continues to rise, while supply struggles to keep up with demand.
Analysts at Citi remain tactically bullish on uranium in the near to medium term, with forecasts pointing to a potential price recovery to $98 per pound later this year.
Citi has revised its uranium price forecasts in response to recent market weakness. Analysts now expect uranium prices to average $94 per pound in 2024, with upward momentum likely in the third and fourth quarters.
Looking ahead, Citi expects uranium prices to average $110 per pound in 2025, reflecting continued bullish sentiment driven by growing demand for nuclear power.
Uranium production increased significantly in 2023, rising by more than 10% or 14 million pounds. This growth was driven primarily by the expansion of existing mines, with Kazakhstan playing a major role.
Kazakhstan’s production has been revised slightly higher, with output expected to reach 59 million pounds this year as sulfuric acid issues are expected to be resolved. In Canada, the Cigar Lake and MacArthur River mines are showing improved performance and are likely to reach their production plateau this year.
The newly developed McLean Lake mine is expected to contribute only about 0.5 million pounds per year.
The rate at which uranium mines are restarted and new mines are developed globally will be crucial to determining uranium prices. Citi expects supply to grow by about 17 million pounds in 2024, followed by increases of about 14 million pounds in 2025, 12 million pounds in 2026, and more modest growth in subsequent years.
By 2030, cumulative supply growth is expected to reach 38 million pounds. However, cumulative global uranium requirements are expected to exceed 40 million pounds during the same period. While inventories are likely to balance the market in the near term,
Citi points to a long-term downward trend, with inventories expected to fall by 20 million pounds by 2030, underscoring the importance of increased production.
“The outlook for uranium demand is steadily improving as the need for clean energy and greater energy consumption over time makes nuclear power very attractive globally,” analysts said.
The need for nuclear power is becoming increasingly attractive, especially in the context of the growing demand for data centers.
In the US, the rise of artificial intelligence and data centers is expected to boost overall energy demand by 11% by 2030. The results of PJM’s recent record capacity auction for 2025/26 exceeded market expectations, indicating strong potential for nuclear power growth in the US.
Although no new nuclear reactors are expected to be built in the United States in the near future, several measures are being taken to increase demand for uranium, including raising uranium levels, extending the life of nuclear plants, and restarting retired nuclear plants.
The restart of nuclear power plants is likely to have the most significant short-term impact on uranium demand, as initial fuel loading requires three times more uranium than normal refueling operations.
In the United States, in addition to the potential restart of the Palisades plant in the coming years, discussions and preparations are underway for the potential restart of Three Mile Island 1, Indian Point Units 2 and 3, and Duane Arnold.
Globally, reactors in Taiwan, India and Canada are also likely to restart over the next five years, which will boost demand for uranium.